Posted tagged ‘Hawaii Taxes’

The 2017 Hawaii Legislative Session started on January 18 with prayers, speeches, and music. Hawaii residents definitely need the prayers – our lawmakers have been busy, introducing 1,601 bills in the House of Representatives and 1,317 bills in the Senate. It’s a mountain of paperwork, negotiation, tax dollars, and details.

Every year, I do a legislative round-up that spotlights bills that could have a big impact on Hawaii. I will focus on taxes, education, individual rights vs. government powers, controversial issues, and (in my opinion) unnecessary and wasteful spending. With over 2,900 bills being proposed in 2017 and less time than ever to read through them, I rely as always on bill summaries to accurately reflect the bills’ intentions.

Here is an overview of the significant tax bills being proposed in the 2017 Legislative Session. I’ve organized the bills into two sections: 9 tax increases to watch out for and 7 bills that could save us time and money. If I’ve missed any important bills, please let me know!

9 tax increases to watch out for:

Taxes on Internet purchases. HB398 and SB161 would require out-of-state businesses to collect general excise (GE) taxes. HB1413 creates a “voluntary” program. This is taxation without representation for out-of-state businesses, and it would be a burden on Hawaii residents who already pay higher shipping costs.

Higher general excise (GE) taxes. HB1319, SB1132 and SB1132 would increase the general excise tax by 0.5% to fund education. HB924 would increase the GE tax by 1% to fund agricultural land purchases. Any GE tax increases should be looked at with suspicion, because they tax transactions from wholesale to distribution to retail.

Higher property taxes. HB180, HB182, HB1254, and SB686 add an education surcharge on residential investment properties and visitor accommodations. Real estate and property taxes are high enough – this could be a small step towards adding an education surcharge for everyone.

Permanent county surcharges on GE taxes. HB349, HB1442, HB1565, SB432, and SB1183 would make county surcharges permanent. SB576 and SB1176 would extend the county surcharge on mass transit beyond 2027 and allow the surcharge to be used for operation and maintenance of mass transit, as well as public transportation and road maintenance. SB1278 would extend the county surcharge on mass transit to 2047 and allow the surcharge to be used for affordable housing and transit-oriented development. Apparently, there is no such thing as a “temporary” tax.

New family leave insurance tax. SB408 would create a family leave insurance program and require employees to make contributions into a trust fund. No new payroll taxes!

Higher costs to own and operate a car. HB1144 and SB1010 would increase the state motor vehicle weight tax. HB1145 and SB1011 would increase the state motor vehicle registration fee. HB1146, SB1009 and SB1012 would increases the State Fuel Tax. HB1259 and SB1187 would add a clean transportation fee. Higher taxes won’t necessarily make our roads better-maintained.

New tax on sugar-sweetened beverages. HB1210, SB375 and SB837 would add a fee on sugar-sweetened beverages.

Discouraging visitors from coming to Hawaii. HB401 would increase the rental motor vehicle customer facility charge from $4.50 to $9.00. HB546 would increase the transient accommodations tax (TAT) to fund workforce housing development. HB1453 and SB1143 would add a $20 visitor tax to fund conservation. Why penalize visitors for spending their time and money in Hawaii?

7 bills that could save us time and money:

Repealing the county rail surcharge. HB970 would end the 0.5% county surcharge for Honolulu mass transit.

Repealing the estate tax. HB364 would end the inheritance and estate taxes. We shouldn’t have to pay taxes on money that was already taxed.

Lower income taxes for lower-income taxpayers. HB362 and HB690 would decreases income taxes by twenty-five per cent for all but top income earners.

More county surcharge taxes benefiting the county. HB719 would reduce the amount of the county surcharge that goes to the State from 10% to 5%. HB1072, SB431, SB938, SB1242, and SB1276 do not specify the lower reimbursement rate. HB1002 would reimburse the State 0.5% and use 9.5% for infrastructure improvements along the rail corridor.

A new earned income tax credit. HB209, HB212, HB352, HB670, SB508, SB648, and SB707 would create an earned income tax credit.

Quarterly withholding tax filings. HB1141 and SB1007 would allow withholding taxes to be paid quarterly instead of monthly. We couldsave time, paperwork, and record-keeping.

The 2017 Hawaii Legislature adjourns on May 4. Please think about these issues and how they may affect you, everyone around you, our children, and our grandchildren. Whether you have concerns or feel strongly about an issue, speak up, talk about it, and be part of the discussion!

The 2015 Hawaii Legislative Session started on January 21. Astonishingly, 1,515 bills were introduced in the House of Representatives and 1,379 bills were introduced in the Senate – over 400 more bills than were introduced in 2014. That’s a lot of paperwork, details, debate, compromise, and tax dollars.

This year, I decided to highlight bills that focus on taxes, education, individual rights vs. government powers, and (in my opinion) controversial issues. With over 2,800 bills being proposed and no legislation-reading minions, I’m relying on bill summaries to accurately reflect the legislators’ intentions.

Here is an overview of the significant tax bills being proposed in the 2015 Legislative Session. This is a long post, so I’ve grouped the bills into five sections: 4 bills that all taxpayers should be worried about, 5 innovative tax proposals, 5 bills that could help taxpayers and residents, 6 bills that make it more expensive to live in Hawaii, and 4 tax proposals on a slippery slope. If I’ve missed any important bills, please let me know!

4 bills that all taxpayers should be worried about

Taxes on Internet purchases: SB259 would implement the Streamlined Sales and Use Tax Agreement so that Hawaii could tax Internet sales. I strongly oppose taxes on Internet sales, because it taxes interstate commerce, it is taxation without representation, and it places an unfair burden on businesses.

GET increase to 5.0%. HB330 would increase the GET from 4.0% to 5.0% for two years to fund the acquisition of agricultural lands. I am skeptical about “temporary” taxes; they always seem to get extended.

GET increase to 4.25%. HB1240 would increase the GET from 4.0% to 4.25% to fund the Hawaii Department of Education (DOE). I am skeptical that we need to increase the DOE budget.

County surcharge increase to 1.0%. HB320 and SB426 would increase the allowed county surcharge on the state tax from 0.5% to 1.0%. I don’t think we are taxed enough.

5 innovative tax proposals

General excise tax (GET) vs. sales tax. SB529 and SB1222 would create a tax reform task force to review the general excise tax versus sales tax. The GET taxes every level of production, from wholesale to retail. It taxes the same product multiple times, and artificially inflates Hawaii’s business activity. A fair sales tax would tax only products sold to the end-user, not the distributor or reseller.

No GET on wholesale purchases. SB946 would repeal the GET on all intermediary business transactions. If I understand correctly (please correct me if I misunderstood), there would be no GET on goods for resale or rents from sub-leasing. Currently businesses must pay taxes on the taxes they collect! This bill would correct the pyramid effect of taxing products at every level of production.

No more estate taxes. HB476 and SB959 would repeal inheritance and estate taxes because they are a form of double-taxation. There is no justification for taxing money when it was earned and again if it is given to a beneficiary.

No more corporate income taxes. HB470 and SB958 would repeal the corporate income tax to encourage economic growth. I am ambivalent about repealing the corporate income tax. While I think that corporations should pay taxes because they use government resources and stability, I realize that we need to grow our economy by luring more businesses to Hawaii.

HB1133 would require the DBEDT to conduct a study on the establishment of tax-free zones in Hawaii. This is an interesting idea and I would like to learn more about it. Would wholesale, distribution, AND retail sales be GET-free? This could encourage more businesses to open and more customers to shop.

5 bills that could help residents and taxpayers

There are a lot of tax credits being proposed, from broad tax credits (like a general excise tax exemption on food and medical services) to very targeted tax credits (like developers of a motor sports facility at Kalaeloa, parcel 9). Here are 5 general tax proposals that could help many of us:

GET exemptions on food and medical services. HB419 would establish a GET exemption for food after 12/31/19 and medical services after 12/31/17. HB477, HB984, and SB957 would establish a GET exemption for food. HB1062 would exempt medical services from the GET.

Hawaii needs more doctors. HB1073 would create a temporary tax credit for physicians and osteopathic physicians who relocate to and practice in Hawaii.

Encouraging assisted living and child care providers. HB422 would establish a GET exemption for property owners who lease to assisted living providers and child care providers.

Helping retired persons live in Hawaii. HB245 would exclude retirement income from state income tax for taxpayers 65 years and older. HB1092 would exclude income received from deferred compensation retirement plans.

Tax credits for school teachers: HB13 and SB821 would give school teachers a tax credit of up to $500 per year. SB864 would exempt a portion of the rent paid by a teacher from the GET.

6 bills that make it more expensive to live in Hawaii

Legislators have come up with a lot of ways for government to make more money. Here are a few of the bills you might want to pay attention to:

Tax on sugary drinks. HB1439, SB1256 would impose a fee on sugar-sweetened beverages.

Higher fees for bicycle and moped registrations. HB1425 and SB1371 would increase the bicycle registration fee to $25 and the moped registration fee to $50. I think it’s odd that we try to encourage bicyclists by raising bicycle fees, and encourage fewer cars by raising fees on mopeds.

New tax on cigarettes for beach clean-up. HB749 would impose on wholesalers and dealers a beach cleanup cigarette fee per cigarette sold, used, or possessed.

Higher wholesale taxes. HB1137 would increase the use tax paid by wholesalers from 0.5% to 1.5% to reduce the State’s unfunded liabilities for the EUTF and ERS. SB1317 would increase the excise tax paid by wholesalers from 0.5% to 1.0% in 2016-2017 to fund infrastructure development and the Department of Education.

Higher GET taxes. HB1253 and SB727 would add a surcharge to the GET to pay for long-term care.

4 tax proposals on a slippery slope

Tax credit for home-schooling. HB1301 would create a tax credit for parents or guardians who home school their children. While I support home-schooling, public education is funded by all taxpayers. This could lead to parents with children in private schools seeking a tax credit too.

Tax credits for long-term insurance. HB18 would provide tax credits to resident taxpayers for long-term care insurance premiums. Would you still qualify for public assistance with long-term care? What happens if your premiums don’t cover all of your care?

Tax credit for renovating agricultural buildings. HB533 would give a tax credit for the qualified costs of developing or renovating agricultural buildings or structures that are exempt from building permit or building code requirements. This seems to encourage buildings that don’t adhere to a building code. What about a tax credit if the buildings adhere to the building code?

Tax credit for hiring seniors. HB1276 tax credit for hiring people 65 years or older. Businesses should hire people based on ability, honesty, and responsibility.

One last note: There are two bills that would reduce the amount deducted from the county surcharge on state tax from 10% to 5% (HB1416) or 3% (HB760); and one bill to increase the state assessment to 25% (SB616). We’re still paying the surcharge, but legislators are fighting over how to divide up the money.

The 2015 Hawaii Legislature adjourns on May 7. Please think about these issues and how they may affect you, everyone around you, and future generations. Whether you have concerns or feel strongly about an issue, speak up, talk about it, and be part of the discussion!

The 2012 Hawaii Legislative Session started on January 18 – a subdued, “working” opening day without fanfare, without entertainment, without public spectacle. That said, there are 2,754 bills introduced in the House of Representatives, and 2,509 bills introduced in the Senate (as of February 6).

Over the past few weeks, I’ve skimmed through the list of proposed bills, hoping that the measure summaries are accurate. I don’t have time to read the full text of every bill, and there seems to be a lot of duplication.

Here are the tax highlights from the 2012 Legislative Session. There are many more tax proposals, increases, decreases, and adjustments; as well as numerous tax credits, exemptions, and repeals. If I’ve missed any important tax bills, please let me know!

There are 10 new and increased taxes to watch:

1. General excise tax (GET) increase: HB460 allows counties to add a 0.5% surcharge on the general excise tax to pay for water infrastructure. HB567 proposes an increase to the GET. HB1631 raises the GET to 5% for five years. SB3063 increases the GET by 1% to fund education. I oppose any increase in the GET. It taxes every level of production, from wholesale to retail, and forces us to pay taxes on the taxes we pay. It also makes our economy seem stronger, by including taxes in business income.

4. Bottles and cans surcharge: HB1120 and SB2139 establish a 5¢ surcharge on deposit beverage containers. This bill would raise the price of beverages.

5. Taxes on out-of-state sales: SB1355 creates a “nexus standard” for taxing out-of-state businesses on their business activities in Hawaii. HB1183, HB1265, and SB2226 implement the streamlined sales and use tax agreement. It is unfair and unreasonable to expect businesses to cater to every state and local tax around the country. Everything costs more in Hawaii, and a tax on Internet sales and out-of-state sales would make everything more expensive for consumers – and reduce our competitiveness around the world.

6. Digital goods tax (music, movies, books, computer software): HB2677 and SB2884 impose the GET on digital goods. We already pay the GET on electronic devices and physical disks/DVDs; this bill proposes that content itself can be taxed (but not online newspapers or blogs, YET).

7. Fuel tax increase: HB1386 raises the environmental response, energy, and food security tax. HB1531 raises the liquid fuel tax for six years. HB2094 increase the fuel tax by 2¢ per barrel. SB176 increases the barrel tax to 35¢ per barrel. SB722 increase the barrel tax. SB722 raises the barrel tax. SB1131 increases the state liquid fuel tax (as well as the state vehicle registration fee and the state vehicle weight fee). Hawaii already has the highest gas prices in the country, and 45.8¢ per gallon is spent just on taxes (as of January 2011), estimates the Tax Foundation.

8. Vehicle registration fee increase: SB1131 increases the state liquid fuel tax, the state vehicle registration fee, and the state vehicle weight fee. SB2346 increases the vehicle weight tax. I actually don’t have a problem with raising vehicle registration fees, as long as the money is used to maintain the roads.

9. Household battery tax: HB2811 proposes a 5¢ fee per package of household batteries and a 10¢ refundable deposit fee per battery. We could easily promote battery recycling through the “blue” bin, instead of a tax.

10. Carbon tax: SB3013 establishes a carbon credits program, with rules for the sale and transfer of carbon credits among public and private agencies. This bill would create new government bureaucracy, possibly duplicate federal programs, and raise the price of consumer goods and electricity

There are also 5 refreshing tax proposals for LOWER taxes and tax reform:

1. GET decrease: SB849 repeals the GET on all intermediary business transactions. This would eliminate getting taxed twice on the same product.

2. Food and medical services exemption: SB269 proposes GET exemptions for food and medical services. SB852 proposes a GET exemption for food. While I believe that the GET should be replaced with a reasonable sales tax on retail-level goods, a food and medical services GET exemption is a good start to easing our tax burden.

3. Wireless surcharge repeal: HB60 and SB783 eliminate the 66¢ monthly surcharge on wireless telephone accounts, originally established to fund the wireless enhanced 911 service. The service has been established; why are we still paying for it?

4. Flat income tax: HB1900 implements a flat income tax by 2015. There are two definitions of “fair” taxes: one rate for all (a “flat” tax) and a lower rate for the rest of us (a “progressive” tax, or those who can, pay – minus the tax credits and exemptions, of course).

5. Tax reform: HB1319 and SB1203 create a task force to reform tax laws. A high school student should be able to understand and explain our tax code. Maybe we could start with this legislative session.

Please think about these tax issues and how they may affect you and everyone around you. If you feel strongly about an issue, speak out! Talk to your family and friends, let your Hawaii legislators know about it, and write letters to the local newspapers.

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